France's Safran 2017 profit beats forecasts, sees further growth

PARIS, Feb 27 (Reuters) - France’s Safran predicted 7-10 percent growth in core income this year as it unveiled higher-than-expected 2017 sales and profits, with strong demand for aircraft equipment offsetting a dip in engine profits.

The maker of engines, landing gear and optronics also said on Tuesday that its board had extended Philippe Petitcolin’s mandate as chief executive by two years to the spring of 2020 as it prepares to absorb Zodiac Aerospace and hike output of its new LEAP jet engine.

Safran, which partners General Electric in producing engines for Boeing and Airbus medium-haul jets, said a financial headwind from the transition to the new LEAP generation of jet engines peaked at 342 million euros ($422 million) in 2017.

Safran, which along with GE faced calls from Airbus this month to eradicate delays in LEAP deliveries during 2018, said it was executing a “strong action plan” to cut costs and achieve a gross breakeven on the fuel-saving engine by end-decade.

Overall, Safran made a recurring operating profit of 2.47 billion euros in 2017 on adjusted revenues that rose 4.7 percent to 16.521 billion euros. It raised the dividend 5.3 percent.

Analysts were on average expecting flat operating income of 2.403 billion euros on revenues of 16.272 billion euros, according to an Inquiry Financial poll conducted for Reuters.

Safran said its widely watched civil aftermarket services revenue grew 11.2 percent in dollar terms in 2017 and predicted 2018 growth in the high single digits. GE said last month that its own aviation services revenue had grown 13 percent in 2017.